UNDP in Africa

Crashed Markets, Crashed Dreams in Nigeria

29 Jun 2009

Like many Nigerians, Chika, a trader in spare car parts, invested in the Lagos stock market a few years ago.

The country’s 85 banks had consolidated into 25, and when the new
firms floated their initial public offers on the stock market, it seemed
like a gold mine. Some shares gained over 400 percent in value within a
few months.

“Investing in shares was more profitable than buying and selling
spare parts, so I put most of my capital into buying shares,” said
Chika, who supports a wife and three children. “I even borrowed money
from friends to buy shares.”

But after the global financial crisis began, capital inflows
plunged, investment capital evaporated and the stock market crashed. The
stock market lost over 70 percent of its value in 12 months, making
the Nigeria market one of the world’s hardest-hit.

Chika, like many Nigerians, lost most of his funds. “I lost so
heavily in the stock market crash that up till now, I’m still reeling
from the effect and yet to find my feet,” he said.

To make matters worse, the global collapse of commodity prices,
especially oil, has also reduced export earnings and government
revenue.

The government and the Central Bank are focusing on creating jobs,
and diversifying the economy away from oil. UNDP is working closely
with the government in this regard, especially to provide technical
input to government economic revival plans, in such areas as providing
social infrastructure; natural resource management and protection; and
jobs generation.